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Guide to credit card charges

Details on credit card charges

Published on Thursday 09 August 2018

Credit card charges are applied to your balance should you miss a payment, withdraw cash, or make transactions abroad. Some of the biggest charges added to your account are when you go over your credit limit, which can also have a detrimental impact on your credit score and ability to borrow in the future.

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How credit card charges could affect your financial future

Use a credit card wisely and it could help you spread out the cost of big purchases, offer protection on purchases and help improve your credit score.

Use it badly and you could incur unnecessary charges, end up in debt and damage your financial reputation – making it harder to get credit in the future.

Here we explain how credit charges work, when you’re likely to get them and how to avoid it.

Always pay off your balance

You should always aim to pay off the balance of your credit card in full each month to avoid paying interest.

...and if you can’t pay in full, at least pay the minimum

If you don’t you’ll get charged a late payment fee, usually £12, and you’ll get a negative mark on your credit file too. The best way to avoid this by setting up a direct debit to ensure your credit card payments are always made on time.

Don’t use your credit card to withdraw cash

These days, we are well accustomed to withdrawing cash from an ATM with our debit cards and not having to pay a fee – but don’t get caught out by assuming the same rules apply to your credit card, as you will usually be hit with a charge of around 3% of the amount you take out.

The majority of cards will charge you for using your card when you’re abroad, whether you’re withdrawing cash or using it for payments.

On top of this you’ll also be charged interest, typically at an annual percentage rate (APR) of around 28% - and this will be levied from the moment you make the withdrawal.

Don’t go over your credit limit

If you do you’ll get charged. If you have always managed to keep within the limit and only exceed it accidentally by a few pounds, contact your credit card provider as soon as possible and ask it to waive the fee.

Take advantage of 0% balance transfer cards

If you’re transferring a balance on a credit card then you may be looking for a card with an introductory 0% interest free period. There are a number of cards now offering up to three years or more interest free, but you’ll normally have to pay a fee to transfer your balance, usually of about 3% of the amount.

For example, if you had £2,500 to move across you’d pay a balance transfer fee of £75 if the fee was 3%.

There are some cards which offer a fee-free transfer. Do your research before applying and use MoneySuperMarket’s Eligibility Checker as it will tell you which cards you’re most likely to get accepted for, without leaving a footprint on your credit file.

Beware of charges on holiday

The majority of cards will charge you for using your card when you’re abroad, whether you’re withdrawing cash or using it for payments. We explain these charges and how to avoid them in our guide to the best credit cards to use abroad.